Manufacturing slowed for a second straight month in May as weak overseas demand and government belt-tightening at home led to the sector's most sluggish rate of growth since October, a survey showed on Thursday.
Financial data firm Markit said its "flash," or preliminary, U.S. Manufacturing Purchasing Managers Index fell to a seven-month low of 51.9 in May from 52.1 the previous month. A reading above 50 indicates expansion.
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The output subindex slipped to 52.8 from 53.7. The pace of hiring slipped to 52.2 from 53.2, the slowest since October.
"Slower growth could be linked to a combination of fiscal drag hurting demand at home while at the same time many export markets remain in fragile states. The latter led to a renewed decline in export orders in May," said Chris Williamson, chief economist at Markit.
That, he added, suggested manufacturing's boost to U.S. growth in the second quarter would be modest at best.
Overall economic growth accelerated in the first quarter but has since lost some steam, according to recent data, repeating a pattern established over the past two years.
Federal Reserve Chairman Ben Bernanke, in remarks to Congress on Wednesday, hinted that the U.S. central bank could scale back monthly bond purchases at its next few policy meetings provided the economy maintained recent momentum.
The "flash" reading is based on replies from about 85 percent of the U.S. manufacturers surveyed. Markit's final reading will be released on the first business day of the following month.
(Reporting by Steven C. Johnson; Editing by Chizu Nomiyama)